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FOUR MEDIA EVENTS THAT ROCKED THE FINANCIAL MARKETS

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The media has incredible influence over many facets of life and the financial markets are no exception.

A famous study by Huberman and Regev showed how an article in the New York Times directly caused a 600% increase in one biotech company’s stock price, despite not actually revealing any new information.

The impact of news stories is often felt worldwide and, with this in mind, a new interactive tool has been launched to help traders get an instant picture of international repercussions.

Market Health by DailyFX, the leading portal for forex trading news, provides a snapshot of global markets and indices all in one place, allowing people to quickly assess the consequences of big events.

To launch the tool, Daily FX has analysed how four major news stories from the last decade have impacted the financial markets, to help investors better understand this complicated relationship.

 

Brexit rumours

Brexit sent shockwaves through the markets, with virtually every British industry from manufacturing to farming experiencing volatility. This uncertainty has seen the value of the pound fluctuate dramatically, particularly when the media speculate about the future.

In August 2019, rumours of a no-deal Brexit began to circulate in the press and sterling subsequently fell to a three-year low against the dollar.

However, in December, when news broke that the Conservatives were about to secure a large majority in government, the pound rose to a year-high. Many newspapers claimed a new period of calm, with hopes that Boris Johnson’s landslide victory would finally bring some stability to the country.

Unfortunately, the Coronavirus has meant 2020 has been anything but stable. The pandemic has completely dominated the news agenda, removing Brexit from the public eye. It’s hard to say whether its absence from the news is affecting trading, as Covid-19 is now the main influence on global markets. However, previous Brexit announcements have led to big price movements, so as soon as they inevitably make headlines again, the markets will surely respond.

Peter Hanks, Analyst at DailyFX, commented: “While Brexit headlines may not dominate the front page as they used to, it is important to consider the effect of persistent uncertainty derived from the theme.

“As the EU and UK clash, regulatory guidelines remain in flux and businesses may look to delay capital expenditures as a result. Consequently, the current Brexit proceedings may not spark dramatic price swings that dominate the tabloids as they used to, but the lingering uncertainty can certainly erode price over time. Thus, it can be argued Brexit is still a very real headwind for the British Pound and FTSE 100, perhaps just not to the degree that it has been in the past.”

 

US and Iran oil crisis of 2019

In the autumn of 2019, Iranian officials reported that one of their oil tankers had been hit by two rockets while in Saudi Arabian waters. The explosions damaged the vessel, causing oil to leak into the Red Sea and tensions between Iran and the USA – a strategic ally of Saudi Arabia – to escalate further.

An Iranian news agency first broke the story and then NBC broadcast it to the Western world, with allegations wildly thrown around. The National Iranian Oil Company said that the cause was under investigation, however rumours were already spreading.

With the media fanning the flames, Brent crude futures – the international benchmark for oil prices – rose by 2.4% to reach over $60.50 a barrel. Part of this increase will have been due to the impact of the attacks on oil reserves, but the media storm surrounding the event suggested that the Iran-US conflict was set to intensify. This prompted traders to jump on commodities in case the hostilities continued to send prices skywards.

 

Coronavirus vaccine

In 2020, the coronavirus ignited global panic as millions of people were infected, businesses closed and share prices tumbled. It was, and remains, the international health emergency of a generation and its unprecedented and universal nature means that it has wholly dominated the news agenda.

As the pandemic worsened, a worldwide search for a vaccine began and rumours of breakthroughs in the media led to movements in the stock markets. Share indexes, such as the FTSE 100, rose and fell with the emergence and then eventual discrediting of new drugs.

In April, stories began to circulate that claimed the American company Gilead had found a drug that was effective. This optimism led to surges in Asian, European and US stocks.

However, as doubts started to appear about the treatment’s reliability, the markets fell once more. The FTSE 100 dropped by 0.7% and the Stoxx 600 traded 0.3% lower.

While Gilead’s proposed remedy was ultimately unsuccessful, it does show the power of the media, as such updates directly boosted investor confidence. News of a successful medical breakthrough could well be the catalyst that sees the world’s markets start to recover.

 

Powerful posting 

In today’s world, most breaking news stories are first revealed on social media, with information able to be shared as soon as events occur. Traders now need to monitor content on both traditional news sites and channels like Facebook and Twitter, as sometimes a single post can create waves in the financial markets.

In 2015, the billionaire activist, Carl Icahn, tweeted that he believed Apple’s stock was undervalued. This simple post caused the tech giant’s market value to rise by more than $8 billion in just one day. Conveniently for Icahn, a major Apple shareholder, his own investment in the company increased in value by $76.5 million.

With social media clearly holding great power, it’s crucial that traders are also wary of fake news stories. When somebody hacked The Associated Press’ Twitter account and posted that President Barack Obama had been injured in an explosion at the White House, the DOW Jones dropped by over 140 points. The temporary loss of market cap in the S&P 500 alone totalled a staggering $136.5 billion. The story wasn’t true, but it shows how significantly markets can fluctuate as a result of social media.

John Kicklighter, Chief Currency Strategist at DailyFX, said: “Before a day begins, traders need to check how markets around the world have performed and how they have reacted to any latest news. A single story can send ripples across the planet, so it’s important to assess it’s full impact before making any moves on the domestic stock exchange.

“The DailyFX Market Health tool has the advantage of a clear and interactive structure, giving traders exactly the benefits they need to start a day.”

 

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EXPERTS SHARE SIX STEPS TO RAISING MONEY SAVVY KIDS

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The ability to manage finances is not something that is known naturally; it must be taught to us as we go through life. From understanding the value of money, to knowing when to save or spend, it’s certainly a valuable life skill.

However, the way in which financial literacy is taught in schools around the world varies massively, often meaning young people grow up with limited understanding of how to manage their money.

To mark International Day of Remittances (16 June), which aims to improve access and understanding of remittances worldwide, experts at global cross border payments company, WorldRemit, have curated advice on how to give children an understanding and appreciation of money.

  1. Talk money 

As a parent, it may seem natural to not discuss finances around children. Instead, try to involve them in conversations about everyday expenses such as food shops and transport. Giving them exposure to these conversations in their everyday life will allow them to understand the essential things that need to be bought before they can have games and clothes, helping to build an appreciation of money and budgeting from an early age.

  1. Introduce money during playtime

When your children reach an age where they begin to understand numbers, starting to show them physical money can be beneficial. Teach them to count cash and understand it at its most basic level. Games such as Monopoly or playing cashier are perfect for this and makes showing them the value of money an enjoyable yet educational experience.

  1. Start budgeting

Once your kids are at an age that they are earning pocket money, you can teach them how to budget. Doing this visually works best and can show them how much money they’re getting and where they need to spend it. Creating a very basic budget with your children will teach them that they can’t just spend all their money on treats, and that it needs to last until their next instalment of pocket money.

  1. Start saving

Not everything can be bought from your paycheck, and kids need to learn that expensive items must be saved for. Start a savings account for them, whether that’s a piggy bank or an actual bank account, to give them somewhere to put money aside and give them sight of this once they’re old enough to understand. Not only will they be able to save for a new bike or video games, but they will also learn discipline and the reward of goal setting.

  1. Spending responsibly

Now they know the value of money, how hard they have to work for it, and what they need to use it for, you can let them spend it with set limits. It can be easy to go too far and make money feel like something that isn’t to be enjoyed, so it’s important to show the joy that can come with buying their favourite toy or sweet treat. Your children will finally feel the reward of treating themselves to something new, whilst being careful not to overspend and appreciating where the money has come from.

 

A spokesperson for World Remit commented: “It’s easy to get caught up in the many lessons and subjects our children are taught at school and forget some of the fundamentals of being an adult. At WorldRemit, we are passionate about educating everyone, adults and children alike, about how to use money wisely.”

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CORE BANKING FINTECH OHPEN APPOINTS JERRY MULLE AS UK MD TO FUEL CONTINUED GLOBAL EXPANSION

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Ohpen, the first fintech platform to bring a bank to the cloud, today announces the appointment of Jerry Mulle as its new UK Managing Director, signifying its commitment to the UK market. Bringing 30+ years’ experience gained from prior roles at Sopra Banking Software, IE Digital and RBS / Natwest, Jerry will ensure Ohpen’s solutions are firmly placed in the UK market for financial institutions to leverage.

 

Last year, Ohpen’s acquisition of Davinci, Europe’s STP number one loan and mortgage software company, made it the only cloud-native core banking engine to offer a full suite of products across savings, investments, loans and mortgages. Now with a 100% configurable platform fueled by powerful APIs, Jerry will continue to position Ohpen as the go-to partner for financial institutions, helping them to navigate the explosion of digital tools at pace and scale.

 

Jerry has driven digital change since internet banking came to the fore. A visionary when it comes to technology enablement in financial services, he has also led the digital evolution of specific financial products, like mortgages. His decade of experience at Natwest / RBS across retail and commercial banking means that Jerry has a deep understanding of the challenges and opportunities facing UK financial services organisations today.

 

In this role, Jerry will be dedicated to bringing Ohpen’s serverless, microservices-based solutions to all types of UK financial institutions, from lenders and building societies to pension providers. Taking an initial laser focus on the mortgages proposition, he will enable FIs to harness Ohpen’s one-of-a-kind platform to free them from legacy systems and embrace true digitisation.

 

“It continues to be an extremely exciting time for Ohpen. We have been busy working on putting the 25% increase in R&D, gained through the acquisition, into practice – with a clear focus on this market. Our technology continues to disrupt banking and liberate financial institutions of burdensome software. Jerry’s experience and deep knowledge of the market, teamed with his proven track record, is why I have no doubt that he will be critical to our success in the UK.” said Matthijs Aler, CEO of Ohpen.

 

On his appointment, Jerry said, “Ohpen’s commitment to the UK market makes this an exciting opportunity. Now is absolutely the time to bring this innovative technology, built on decades of expertise, to UK providers and their customers in a way that works for them.

 

“In the mortgages space, UK customers are crying out for a less complex and more streamlined process, and with Ohpen’s STP ability, I genuinely believe that our proposition allows financial institutions to offer exactly this. Ohpen is positioned to be the number one driver of this in the UK and I look forward to being part of the growth journey.”

 

Jerry joins a growing team of senior executives, with his hire coming shortly after the appointment of Xandra Niehe as Chief People & Culture Officer (CPCO). She will be dedicated to building a culture that facilitates this level of growth while keeping its combined core values in place.

 

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